The Pixar Touch: A Great Book by David Price

I have read a lot of stories about organizations over years, especially about the success or failure of innovative organizations, but The Pixar Touch is one of the very best. I've been quite interested in Pixar since Huggy Rao and I did an interview of Brad Bird for the McKinsey Quarterly, but I learned a lot from this book I didn't know.

The story itself is stunning; I had not realized that the start of the dream went way back to Ed Catmull's dreams as a teenager and his goals as a doctoral student and young man to start making computer animated movies. The twists and turns in the story are remarkable. There are plenty of stories about Steve Jobs and his often difficult personality, but there are other things that emerge that I found even more interesting. One has to do with the wild swings in Pixar's strategy. Apparently, when Jobs bought it from George Lucas for 5 million bucks, he got a pretty good deal because Lucas was going through an expensive divorce and needed the money.

The other twists and turns that I found interesting where all the different kinds of companies that Pixar tried to be during the years before it became a successful film company. For some years, they tried to be a computer hardware company, selling high-end graphics machines. They also tried to be a computer software firm at times. They made TV commercials to pay the bills. At one point, they almost had a deal to sell a whole bunch of machines to Phillips to use for medical imaging, but Jobs pissed-off the Phillips people so much that they walked. Jobs also came fairly close to selling the company several times, especially to Microsoft, as he would occasionally give-up on it (Who could blame him? He pumped millions and millions of dollars into it, and it never made any money until Toy Story came along).

Jobs approach to organizational strategy, if that it what you want to call it, reminds me of strategy in high-velocity environments as described by my Stanford colleague Kathy Eisenhardt. One strategic direction after another -- many of which seemed unlikely at the time -- was embraced with vigor and intensity by Jobs, and his ability to at least briefly convince others that it was right and certain to work (using his famous reality distortion field) is interesting and impressive. But in many ways, I am more impressed with Jobs' ability to quickly drop an old strategy when there was good evidence it was failing, and then turn to the next one with equal enthusiasm.

This may sound sort of crazy, but I also think it is how skilled strategists act when what they are doing carries a huge risk. You need to build enthusiasm about what you are hoping to accomplish, as energy and the self-fulfilling prophecy increase the chances that a risky idea will succeed. But you also need to be equally skilled at pulling the plug when your current tactic is failing (See this post about Andy Grove's comments on leadership, he is proposing a similar mindset). One of the ideas that was viewed as "most dumb" by the people around Jobs was -- before Toy Story was released ,and the company was still deep in the red -- started pushing very hard for an IPO. The lawyers and investment bankers thought he was nuts. Well, after Toy Story became a huge hit -- even though they had no other track record of success --Jobs quickly took them out for an IPO... setting off a stream of events that made him a billionaire for the first time. There is also an argument made in the book that, by an rational standard, Jobs should have closed Pixar years before Toy Story, but he persisted because he couldn't handle another failure after getting fired by Apple and failing at NEXT. Desperation is sometimes the mother of innovation!

One other fascinating thing. Now, Pixar is part of Disney and executives from Pixar like the amazing John Lasseter (fired by Disney animation years ago) are now in charge of Disney's film animation efforts. But during the production ofthe first Toy Story, people at Disney -- including CEO Michael Eisner -- demanded specific changes in the plot that made it a better movie, and the expertise of diverse people at Disney made it a better movie in many other ways. The blood between Disney and Pixar started getting bad as Pixar became more successful (especially between Eisner and Jobs), and Disney animated films started getting worse and worse. But I had not realized how much Disney had helped in the early days of Toy Story.

Finally, during several visits to Pixar over the past several months, I have been struck by how virtually everyone from two-time Academy Award winner Brad Bird to a guy I met who started out working at Pixar as a janitor years ago absolutely refuse to take their success for granted. They are proud of what they have accomplished, but downright paranoid about the risks of taking a turn toward mediocrity. This blend of pride and paranoia stems, in part from the fact that they were weirdos, outcasts, and -- in case of Pixar and its forerunners-- on the edge of being shutdown so many times over a 20 year or so period (the number of different places and ways that the founders Ed Catmull and Alvy Ray Smith worked to ultimately create this success were astounding, from early work at the the University of Utah, to Alvy Ray Smith's work at Xerox PARC where he got fired because management believed that color graphics had no future in the modern office, to several years spent working in New York for a generous and bold multi-millionaire, to the years working for Lucas, and then the sale to Jobs... and all along, although Alvy Ray Smith left because he his relationship with Jobs soured, and John Lasseter joined-up, the vision of making top quality computer animated films drove these founders throughout.)

In addition to the fact that success has not come to easy to these persistent people, the other force that fuels the pride and paranoia of these people is the history of Disney's animation studio (where both Lasseter and Brad worked, and both were fired too), where a once great studio begin turning out mediocre work because they became self-satisfied and started resting on their laurels. They started doing work that of such poor quality that it depressed and angered the old animators who had made it such a great place. The belief in the importance of a great story and the power of creating characters that express authentic emotion goes back to the earliest days of Disney and are beliefs that guide what happens at Pixar to this day.

So, in addition to being a fascinating and well-told story, I would nominate this book for my personal top 100 business books -- and I think it belongs in Jack and Todd's book. The lessons about leadership, strategy, culture, innovation, persistence -- and the degree to which random events rather than planning shape human and organizational history -- are all on display.

P.S. If you are interested in books about creative organizations, I also recommend Dealers of Lightning, a well-crafted history of the glory years at Xerox PARC.